These are the only 5 financial accounts you really need

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Managing your cash doesn't have to be complicated. In fact, it shouldn't be. The more transparent your finances are, the easier it is to see whether you're on track to reach your financial goals — from sticking to your monthly budget to saving enough money for retirement.

While it can feel overwhelming to get started, once you've got a few core bank accounts and investments set up, you'll be on track to building real wealth.

Let's get right to it: Here are the five types of accounts you really need.

1. A checking account

Available at banks and credit unions, a checking account is the main landing spot for depositing paychecks and other income. It's also the account you will mostly likely draw from to pay bills. Think of it as a reservoir "from which all aspects of cash management emanate," as financial adviser Douglas Boneparth described it to Mic via email.

The main reason you'll need to use checking as your primary account is other types have stricter limitations on how often you can move money: Federal rules actually prohibit more than six withdrawals per month from a savings account. "Checking accounts allow for quick access to your cash and principal protection, making them essential for operating your financial life," Boneparth said. "Generally, all income and expenses flow through checking."

As you shop around for the best possible checking account, be sure to focus on features like free ATM withdrawals, zero overdraft fees, zero maintenance fees and a good mobile app. And even though — very broadly speaking — savings accounts and others like certificate of deposit accounts tend to pay more, you can actually find high-yield checking accounts that earn competitive interest rates if you look hard enough. That way your money doesn't just sit there: It grows over time.

Get a checking account that makes it easy to move money around without incurring fees.
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2. An emergency fund

An emergency fund might also be placed in a (high-yield, ideally) checking account — but you'll want to make sure it's separate from your main account so you are not tempted to dip into it, except in a real emergency. This type of liquid account is essential to avoid debt and protect yourself in case of financial setbacks, like a job loss or unexpected illness. It should have enough money to cover three to six months of living expenses. 

"Your emergency fund should be a cash or cash-equivalent account," Jill Schlesinger, a certified financial planner and senior ambassador on the CFP Board, told Mic via phone. And if you want to get the best possible interest rate, you could look beyond checking accounts to savings, money-market accounts, CDs (with penalty-free withdrawals) or even certain savings bonds. Watch out for any accounts — like CDs with early-withdrawal penalties — that will make it hard to pull out money in a crunch.

And do not invest your emergency fund in the stock market, as a rough patch could wipe out your savings: "This is your safety net, so don't choose anything risky," Schlesinger said. 

Not sure how much money you'll need to survive for three to six months without income? Try tracking your spending for 30 days to see how much you spend, then multiply that by three — and six — and aim for something in between. Don't worry if you don't have the entire amount to set aside right away: Any emergency savings is better than none.

Be prepared for any emergency.
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3. A short-term savings account

Separate from an emergency account, which should only be accessed in case of financial emergency, a short-term savings account allows you to pay for large, planned expenses — like a trip or holiday shopping — that requires time and commitment to save up for. But beware: Research suggests you should use your main "short-term" account for only one big goal at a time to stay focused and save more sooner. Too many goals are distracting.

"Fuzzy savings goals usually don't pay off, resulting in chaotic finances," financial planner Neal Frankle told Bankrate. "Without targeted savings accounts, people are more likely to raid their emergency savings accounts for big purchases."

So prioritize. As with your emergency account, you might want this money relatively accessible — though if you know exactly when you'll need it, you can choose a high-yield CD that comes to term right before that date; you won't need to worry as much about finding one with a zero early-withdrawal penalty. But a high-interest savings or money-market account works, too.

Again, staying focused on one big "short-term" goal at a time is ideal: "The only time you may prefer to combine savings is to reach minimum balances banks may require to avoid fees or get perks," Schlesinger advised. The best workaround is to just choose a better bank — one without minimums.

4. A long-term savings account

In addition to short-term savings, you almost certainly have some long-term financial goals. You may want to buy a car in two years — or a house in ten.

For long-term savings, Schlesinger recommends investing in a "diversified portfolio ... from major investment houses like Vanguard or T-Rowe Price, with very low-cost index funds and an easy platform to navigate." While index funds holding stocks certainly do carry risk, a longer time horizon helps smooth out the chance you'll lose money — and gives your cash more room to grow than in a paltry-earning savings or interest checking account.

You could also take advantage of robo-advisers like Betterment that offer personalized investment plans at lower costs than traditional advisers.

Save money so you'll have it for big goals.
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When setting targets for long-term saving, prioritize: Set honest goals, figuring out how much the goal costs and when you will actually need the money.

5. A retirement account (or two)

Finally, you need to save for the longest-term goal of all: retirement. Designated retirement accounts come with advantages you won't get with regular savings accounts, including tax-deferred growth and even tax-free withdrawals, with a Roth account.

If you work for a company that provides a retirement plan — like a 401(k) — with a match, be sure to invest at least the minimum to take advantage of the match. "That's essentially free money," Schlesinger said. 

And if you want to really diversify your savings, you could open up a second separate account, like an Individual Retirement Account, which isn't tied to your employer. This is especially a smart move if you are a freelancer or otherwise do not have access to a workplace account. (And there are other special retirement accounts available to self-employed folks, as well.)

IRAs come in two main "flavors": traditional and Roth, which is an account that takes post-tax income, but then lets you withdraw in retirement tax free. "Money invested in a Roth IRA grows without tax, so it is an amazing way for young people to save over the long-term," Schlesinger said.

There also exist Roth 401(k) plans, though not all employers offer them.

You'll want to research options carefully, both for the account you choose and the investments you make within the plan. "Be mindful of the types of fees and expenses associated with any investment account," Boneparth warned. 

With the right retirement, savings and checking accounts to accomplish your goals, all that's left is to start depositing money into them. 

Correction: April 5, 2017

An earlier version of this article misstated Jill Schlesinger's title. She is a certified financial planner and senior ambassador on the CFP Board.

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